Here’s a bullish indicator for ThinkorSwim, inspired by a lead strategist at JPMorgan Chase & Co.
The VIX (Cboe Volatility Index) is a widely-followed measure of stock market volatility.
JPMorgan strategists, led by Mislav Matejka, have developed an indicator based on the VIX that could be used to trade the markets more effectively. 1
The concept is simple:
That said, we can create an indicator for ThinkorSwim based on that condition.
VIX Buy Signal Indicator for ThinkorSwim
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# Indicator Name: JPMorgan’s VIX Buy Signal
# Description: A bullish indicator from JPMorgan strategists
# Version: 1.0.0
# Developer: Melvin C.
# URL: https://thinkscript101.com/vix-buy-signal-indicator-for-thinkorswim/
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declare lower;
def vix_data = close("VIX");
plot vix_average = (vix_data / average(vix_data, 30));
plot signal_line = 1.5;
vix_average.SetPaintingStrategy(PaintingStrategy.HISTOGRAM);
The VIX Buy Signal indicator has been triggered more than 21 times during the past 30 years.
Every single time, the S&P 500 Index increased by an average of 9% over the ensuing six months.
The indicator has demonstrated a 100% accuracy rate outside of recessions.
Usage
- Set your ThinkorSwim chart to the Daily timeframe.
- Use it on the S&P 500 Index (example: SPY or VOO).
- Trade type: Bullish, upside potentials.
Under the Hood
As part of the learning process, I will post some important functions and code that was used during the creation of the indicator.
If you’re curious about how the indicator is created, see the part below.
close("VIX"): Use this method if you want to pull price data from another ticker.
(vix_data / average(vix_data, 30)): The current price of the VIX is divided by the average price of the VIX from the last 30 days.
SetPaintingStrategy: Controls how a line is painted. From the example above, we used HISTOGRAM style type.
Happy trading!
Reference:
1. https://www.bloomberg.com/news/articles/2022-02-08/jpmorgan-strategists-see-sure-fire-sign-it-s-time-to-buy-stocks
is it possible to script this on intraday for SPX and other tickers? thanks
I’m afraid not.
Following your nice vix buy indicator for thinkorswim only to find out not working on spx or xsp??